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TRON, ApeCoin, and Decentraland Price Analysis: 10 May

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There was a heavy sell-off in the crypto market in the past few days as Bitcoin shed value alongside global stock indices. TRON had been one of the few coins that had trended upward in the past week, but it fell beneath crucial support. ApeCoin and Decentraland could offer selling or shorting opportunities in the hours to come.

TRON (TRX)

Source: TRX/USDT on TradingView

On the hourly chart, TRX was in an uptrend in the past few days but was simply unable to climb past the $0.089 resistance level. At the same time, the past three days also saw the A/D indicator begin to fall even as the bulls tried to drive the prices higher.

This was a sign that sellers had strength in the market, and the past couple of days saw TRX retrace back to the $0.0722 support level. The Awesome Oscillator was also well below the zero line to show strong bearish momentum. The $0.08-$0.082 area (red box) is likely to serve as resistance.

ApeCoin (APE)

Source: APE/USDT on TradingView

ApeCoin has fallen nearly 40% after dropping below the $14.5 mark, a level that was formerly a range high. APE broke out of this range in mid-April, but in the past few days, it fell below this range.

The coin formed a bullish divergence (white) with the RSI on the charts and bounced from the $8 mark. However, this would likely be followed by a hidden bearish divergence to signal the continuation of the bearish trend. Such a divergence, alongside the Stochastic RSI forming a bearish crossover, could be used to enter a short position with careful risk management.

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To the downside, $7 is a technical target based on Fibonacci extension levels.

Decentraland (MANA)

Source: MANA/USDT on TradingView

The $1.25-$1.4 is an area of long-term demand for MANA, and in the past few days, this area was broken quite decisively. The OBV has been in a downtrend to signal the strength of the sellers in the past week.

At press time, both the OBV and the RSI were climbing. This was likely not a reversal of the trend, but rather a relief rally toward $1.1-$1.15. A hidden bearish divergence, that is, a higher high on the RSI but a lower high on the price chart, is something to look out for on the hourly chart. Such a development could lead to MANA’s bounce being reversed.

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Bitcoin․com Exchange Market Insights Report For May 2022

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Bitcoin․com Exchange Market Insights Report For May 2022

This is the May 2022 monthly market insights report by Bitcoin.com Exchange. In this and subsequent reports, expect to find a summary of crypto market performance, a macro recap, market structure analysis, and more.

Crypto Market Performance

May got off to a rough start as the Federal Reserve confirmed a hawkish bias on the back of lingering inflation. Markets reacted by going risk-off.

The collapse of LUNA and UST added fuel to the fire, with the result that crypto markets saw historically large drawdowns.

BTC reached a low of $25.4k USD, which is 60% off its all-time high of $65k. ETH saw a comparable drawdown.

Other large-cap coins fared even worse, with AVAX and SOL being down over 75% and 80% respectively from their all-time highs.

During the first week of the month, gaming (play-to-earn) saw the worst performance across crypto sectors, followed by top assets (large caps) with losses of 9.6%, and Web3, which was down 8.9%.

Source: messario.io

Macro Recap: Quantitative Tightening (QT) Is Here to Stay

As expected by the market, on May 3rd the Federal Reserve announced that it had voted for a rate hike of 50 basis points to the funds rate. This announcement was on the back of “robust” job gains and a decrease in unemployment, which has led to increases in inflation. There was also the reduction of the balance sheet, starting from $47B per month to up to $95B per month after the first three months. According to the Federal Reserve’s later statements, System Open Market Account (SOMA) will reduce its holdings of U.S. agency debt and U.S. agency mortgage-backed securities (MBS).

The narrative was focused on uncertainties regarding the macro environment, as Russia’s invasion of Ukraine intensifies and supply-chain issues in China contribute to lackluster growth globally.

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CPI data provided no relief, as it marked 8.3% for the month of April, beating expectations by 20 basis points. April’s numbers were down only slightly from the 40-year high of 8.5% reached in March.

Market Structure: Decrease in Flows and Long-Term Holders Continuing Capitulation

As macro conditions seem to worsen, we take a look at on-chain metrics to better understand price action with the aim of providing a clear view on what could come next. There are two areas we will focus on. These are 1) decrease of profitability by long-term holders (and capitulation) and, 2) stablecoin supply/demand.

The graph below is the Long-Term Holder Spent Price vs Cost Basis, which depicts capitulation in the market by Long Term Holders (LTHs). The blue line represents the Long-Term Realized Price, which is the average buying price of all coins that LTHs hold. This is declining, as you can see from the graph, meaning LTHs are selling off their coins. The pink line represents the average purchase price of the coins being spent by LTHs on that day. As you can see, it’s trending higher, meaning that LTHs are selling at break-even on average.

Source: glassnode.io

Stablecoins are a key component of the market, as they facilitate entries of new players as well as standardizing a unit of exchange for crypto. By looking at the supply of stablecoins we can know whether or not more participants are entering the market. As seen on the graph below, stablecoin supply grew tremendously during the last bull market due to the increase in demand for crypto and thanks to new players entering the market. The supply of major stablecoins went from $5.33 billion to $158.2 billion in less than three years. Note, however, that aggregate stablecoin supply has been flat so far in 2022.

Source: glassnode.io

This was driven mostly by an increase in redemptions of USDC (into fiat), totalling $4.77B since the start of March despite an increase of $2.5B in USDT over the same period. In the below chart, we can see the 30-day change in aggregate Stablecoin Supply vs the Contribution by USDC. USDC has seen a supply contraction by a rate of -$2.9bn per month, which can be identified in the bottom right corner of the graph by the dashed red circle.

Source: glassnode.io

Being one of the most widely used stablecoins, USDC supply contractions indicate a move of money from stablecoins as a whole back to fiat. More significantly, this indicates a risk-off sentiment as well as weakness in the crypto market overall.

LUNA and Do Kwon, The Man Who Flew Too Close to the Sun

In this section we would like to go over the rise and fall of UST and the Terra ecosystem, and the resulting domino effect that impacted the markets. UST, one of the largest stablecoins ever created, was an undercollateralized algo-stablecoin in the Terra ecosystem. It was created and sponsored by the Luna Foundation Guard (LFG), led by outspoken founder Do Kwon.

As an algorithmic stablecoin, UST implemented a two-token system where the UST and LUNA supply should remain similar and where both tokens were redeemable between themselves. If the price of UST exceeded $1, traders were incentivized to burn LUNA in exchange for one dollar worth of UST, which increased its supply and theoretically drove the price back to $1.

Meanwhile, Anchor, a DeFi staking protocol within the Terra ecosystem, was offering “saving account” deals for users to stake their UST. This was paying a whopping 20% APY. Anchor generated this yield by borrowing and lending UST to other users for collateral. A large sum of this collateral was LUNA.

So what went wrong? Due to its early success, the Terra ecosystem grew enormously to become one of the largest projects by market capitalization, at $40B. LFG, led by Do Kwon, began to think of ways to improve the backing of UST. Thus, they decided to back part of their reserves with large cap cryptocurrencies such as BTC and AVAX among others, making UST a multi-collateralized algo-stablecoin. Having done that, the stability of UST peg became inherently correlated with the value of the collateral in its reserves. On May 8th, 2022, 4pool Curve, one of the largest stablecoin pools, saw an increase in UST supply of 60%, as shown in the chart below.

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Source: dune.com

Shortly thereafter, an $85 million UST-to-USDC swap brought the pool back to being only slightly imbalanced. Big players subsequently came in and, by selling ETH in the market, bought the value of UST back nearly to its $1 peg, as shown in the chart below.

Source: Bitcoin.com Markets

You can see that the balance of the Curve pool was temporarily restored to previous levels and the peg was temporarily saved. However, on May 9th, we see that a similar situation occurred when another massive sell of UST was executed on the Curve pool, pushing the imbalance to above 80% of UST in the pool. The price of UST dropped to about $0.60 around the same time. The crypto market entered into a panic and the collateral held by LFG became less valuable in a downward spiral. This impacted the value of LUNA, as it’s supposed to be continuously sold to keep the peg – and this was the beginning of the end. The peg never went above $0.8 from that point on, and the value of LUNA nose dived by over 99%, currently sitting at $0.00026 USD.

A lot of questions are still unanswered from the Terra/Luna episode. Specifically, who was responsible for the massive selling of UST on Curve? Was this an orchestrated “attack” to depeg UST? Why didn’t LFG come up with a contingency plan to stop the devaluation of LUNA and UST? Why was the process of restabilization of the token done manually by the foundation and Do Kwon? Are BTC collateralized tokens safe in highly correlated scenarios?

We are yet to see the aftermath of this black chapter in crypto history, as the Terra ecosystem and UST are mostly marketed towards retail money. You may well see increased scrutiny from regulators towards stablecoins and crypto overall. One thing you must remember from this is that crypto is still an immature market and being the decentralized, crowdsourced environment that it is, comes with high risk. Thus, you should always keep in mind that every investment has its risks and doing your own research continues to be paramount.


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Bitcoin.com Exchange gives you the tools you need to trade like a pro and earn yield on your crypto. Get 40+ spot pairs, perpetual and futures pairs with leverage up to 100x, yield strategies for AMM+, repo market, and more.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Luna Foundation Guard Discloses Usage Of Bitcoin Reserves

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Luna Foundation Guard Discloses Usage Of Bitcoin Reserves

The Luna Foundation Guard, the entity in charge of safeguarding the peg of UST, the stablecoin of the Terra ecosystem, has revealed how it used the available Bitcoin reserve before the recent debacle involving the Terra ecosystem. The organization sold part of the bitcoins owned directly, while another part was traded on different dates to try and stabilize the value of UST. The reserve was comprised of more than 80,000 BTC.

Luna Foundation Guard Clarifies Reserve Movements

The Luna Foundation Guard (LFG), the organization tasked with safeguarding the dollar peg of UST, the algorithmic stablecoin of the Terra ecosystem, has broken its silence to explain the use of the assets it had under its custody. The institution had amassed more than 80K BTC, which was to be used in case of market imbalances affecting the value of terrausd (UST).

According to reports on social media, the foundation spent almost all of its BTC reserves in a failed attempt to save UST. This was made in three different operations. In the first one, LFG sold 26,281,671 USDT & 23,555,590 USDC for an aggregate of 50,200,071 UST, in what was the first defensive transaction against the depeg incident.

Also, the LFG stated it:

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Transferred 52,189 BTC to trade with a counterparty, net of an excess of 5,313 BTC that they have returned, for an aggregate of 1,515,689,462 $UST.

However, the company did not identify the counterparty involved in this transaction.

Last Measures

Even with the intervention of the LFG, the peg was not restored. LFG declares that Terraform Labs exchanged the last of the BTC reserve on May 10, when UST’s market price had touched $0.75. This transaction involved the sale of 33,206 BTC for an aggregate of 1,164,018,521 UST.

The Luna reserve is now comprised of only 313 BTC, meaning that most of the BTC owned by the organization were deployed in the defense effort. Other cryptocurrencies in the reserve, including 39,914 BNB and 1,973,554 AVAX were not used and still are in the possession of the organization. However, there is no clear answer as to how these will be used in the future.

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The statements from LFG help to clarify how the Terra depeg incident happened, and how these funds were used. An analysis of the transactions conducted earlier by Elliptic, a blockchain analytics and compliance company, found that the majority of the funds were sent to two exchanges: Binance and Gemini. However, the company declared that it was “not possible to trace the assets further or identify whether they were sold to support the UST price.”

What do you think about the report on the use of Terra’s BTC Reserve? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Portugal To Tax Cryptocurrency Income According To Minister Of Finance

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Portugal To Tax Cryptocurrency Income According To Minister Of Finance

Portugal, one of the countries considered a crypto tax haven due to its absence of crypto-related taxation, is preparing to change this policy. Fernando Medina, minister of finance of Portugal, stated that the country is working on a framework to allow the taxation of cryptocurrency income gains following the principles of “justice” and “efficiency,” and declared that there cannot be gaps for any income gains to be obtained without taxation.

Portugal to Tighten Cryptocurrency Taxation Policy

Portugal, one of the countries that has been touted as a crypto haven due to the absence of taxation in this regard, is working on the establishment of laws that will allow it to tax these digital assets. The statements on the subject were made by the minister of finance of the country, Fernando Medina, during a state budget discussion.

Medina explained:

Several countries are building their models regarding this matter and we are going to build ours. I do not want to commit myself to a date at this moment, but we will adapt our legislation and our taxation.

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The government had already given signs of its future direction regarding cryptocurrency taxation. The Ministry of Finance asked the Portuguese Tax Authority to study how crypto assets were taxed in other regions in 2021 “in order to propose an adequate tax framework for these new instruments, taking into account the necessary balance between the fair distribution of income and wealth and the attraction of foreign investment.”

Models Still Not Decided

While the models by which cryptocurrency gains will be taxed are still unclear, Medina stated that these would be set up following the principles of “justice” and “efficiency,” aiming for a tax system that would not scare cryptocurrency investments out of the country. Medina declared this system should make taxation “adequate,” but not of an “exceptional character that ends up reducing revenue to zero, which is contrary, in fact, to the objective for which it exists.”

However, he was firm in the belief that cryptocurrency should be taxed eventually, stating that there could not be “gaps that cause there to be capital gains in relation to the transaction of assets that do not have a tax.”

Recently, cryptocurrencies are starting to be used as a means of payment in real estate transactions in Portugal. On May 8, the reported first transaction of this kind happened in the country, when an apartment in Braga was sold for 3 BTC.

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What do you think about the statements on crypto taxation made by Portugal’s minister of finance? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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